股东各位

Building on the core values passed down from our predecessors over the past 110 years, we will work as One Denka to swiftly return to a growth trajectory and boldly pursue the realization of Denka’s vision.

During the fiscal year ended March 31, 2025 (fiscal 2024), Japan’s economy saw a modest recovery, marked by a pickup in consumer spending and capital investment. Although the global economy showed signs of overall recovery, uncertainty persisted due to a slowdown in China and continued inflation in Europe and North America. Now, concerns over an economic slowdown are growing in light of U.S. tariff policies and sharp exchange-rate swings.
Amid these circumstances, the Group focused on expanding its business and securing profits by advancing initiatives based on the three growth strategies outlined in our eight-year management plan, “Mission 2030,” launched in fiscal 2023: “Business Value Creation,” “Human Resources Value Creation,” and “Management Value Creation.”
As a result, net sales totaled 400,251 million yen, up 10,987 million yen (2.8%) year on year, reflecting sales price revisions in response to higher raw material and fuel costs, as well as increased proceeds from a weaker yen. On the earnings front, operating income increased to 14,413 million yen (up 1,036 million yen, or 7.7% year on year), and ordinary income rose to 7,623 million yen (up 2,148 million yen, or 39.3% year on year) as improved terms of trade resulting from the weaker yen offset the negative impacts of lower sales volumes and higher fixed costs due to foreign exchange translation effects at overseas subsidiaries. The Group recorded net loss attributable to owners of parent of 12,300 million yen (compared with net income attributable to owners of parent of 11,947 million yen in the previous fiscal year), primarily due to extraordinary losses, including a loss on business liquidation related to the suspension of operations at the Ofuna Plant and an impairment loss on fixed assets at Denka Performance Elastomer LLC (DPE), a U.S. subsidiary.

In fiscal 2024, to resolve sluggish business performance resulting from changes in assumptions underlying the management plan, “Mission 2030,” we focused on laying a foundation for returning to a growth trajectory.
Our top priority in this effort has been a fundamental reform of our chloroprene rubber business, as part of portfolio transformation under the “Business Value Creation” strategy. DPE has placed significant pressure on the Groups profits due to rising costs, declining production volumes, staffing challenges, and a weakening global economic environment for chloroprene.As a result of these circumstances, we recorded an extraordinary loss on DPE-related noncurrent assets and decided to suspend of Chloroprene Rubber Production.
We also decided to suspend operations at the Ofuna Plant. With regard to its main product, Toyokalon®—a synthetic fiber used in wigs—we are transitioning toward more profitable businesses by consolidating operations at our Singapore subsidiary. This decision reflects structural changes, declining demand, and rising raw material and fixed costs.
In addition, we tightened investment selection criteria and launched a thorough cost reduction project leveraging external expertise. However, due to structural reforms related to DPE and the Ofuna Plant, we recorded extraordinary losses in fiscal 2024 and ultimately reported a substantial net loss.
Going forward, we will further strengthen our foundation for returning to a growth trajectory. In the chloroprene rubber business, we will steadily advance drastic measures, exploring all options—including the potential sale of DPE’s operations or assets. We will also continue to focus on tightening investment selection and delivering tangible outcomes from the cost reduction project. Furthermore, in light of changes to underlying assumptions, we will revise the management plan, “Mission 2030” within the current fiscal year. While our fundamental policy and long-term strategy remain unchanged, we are committed to ensuring that our initiatives deliver results. To that end, we will foster a corporate culture and build an organizational structure that promotes our core value of “Initiative,” and act with a sense of urgency to return our business performance to a growth trajectory.
Denka was established in 1915 to manufacture and sell calcium carbide and calcium cyanamide. This May, we celebrated the 110th anniversary of our founding. Guided by a strong commitment to contributing to society through manufacturing, our predecessors consistently embraced bold challenges and pursued new business opportunities. Today, Denka has evolved into a company with a diverse portfolio spanning electronic materials, synthetic rubber and resins, and even medical fields such as vaccines and diagnostic reagents. Our ability to adapt flexibly to environmental changes and to develop products that benefit society has shaped our 110-year history and is deeply embedded in our corporate DNA.
Today, 110 years on, we have set a new Purpose to guide us: “Make the world a better place as specialists in chemistry.” This Purpose is rooted in the core values of “Initiative,” “Integrity,” and “Empathy,” which have been passed down by our predecessors. As part of our Vision, we have also defined our Mission: “By 2030, we will increase the value of our human resources and management, and we will focus on creating business value that combines the three elements of specialty, megatrends, and sustainability.” Reaffirming that safety, quality, and environmental responsibility are absolute prerequisites for our continued corporate activities, we are committed to working as “One Denka” to return to a growth trajectory and pursue the realization of Denka’s Vision.

We hope we can count on the continued understanding and support of our shareholders in this endeavor.